the offering€¦ · any investors of $75,000 or greater will be invited to the proof kick-off...

OFFERING MEMORANDUMOFFERING MEMORANDUM

PART II OF OFFERING STATEMENT (EXHIBIT A TO FORM C)PART II OF OFFERING STATEMENT (EXHIBIT A TO FORM C)

Proof Media Inc.Proof Media Inc.

6 grandview lane6 grandview laneManalapan, NJ 07726Manalapan, NJ 07726

www.proofmedia.iowww.proofmedia.io

2500 shares of Common Stock2500 shares of Common Stock

A crowdfunding investment involves risk. You should not invest any funds in thisA crowdfunding investment involves risk. You should not invest any funds in thisoffering unless you can afford to lose your entire investment.offering unless you can afford to lose your entire investment.

In making an investment decision, investors must rely on their own examination ofIn making an investment decision, investors must rely on their own examination ofthe issuer and the terms of the offering, including the merits and risks involved. Thesethe issuer and the terms of the offering, including the merits and risks involved. Thesesecurities have not been recommended or approved by any federal or state securitiessecurities have not been recommended or approved by any federal or state securitiescommission or regulatory authority. Furthermore, these authorities have not passedcommission or regulatory authority. Furthermore, these authorities have not passed

upon the accuracy or adequacy of this document.upon the accuracy or adequacy of this document.

The U.S. Securities and Exchange Commission does not pass upon the merits of anyThe U.S. Securities and Exchange Commission does not pass upon the merits of anysecurities offered or the terms of the offering, nor does it pass upon the accuracy orsecurities offered or the terms of the offering, nor does it pass upon the accuracy or

completeness of any offering document or literature.completeness of any offering document or literature.

These securities are offered under an exemption from registration; however, the U.S.These securities are offered under an exemption from registration; however, the U.S.Securities and Exchange Commission has not made an independent determinationSecurities and Exchange Commission has not made an independent determination

that these securities are exempt from registration.that these securities are exempt from registration.

CompanyCompany Proof Media Inc.

Corporate AddressCorporate Address 6 Grandview Lane, Manalapan, NJ 07726

Description of BusinessDescription of Business Proof Media, Inc. is a community enabled technologycompany that allows users to vote on the truthfulness of

online content, such as news stories, blog posts, tweets andother social media. What makes the Proof solution

successful is that it relies on the wisdom of crowds, coupledwith a unique and proprietary voting algorithm, all

recorded on the blockchain. Proof has one main goal withthe release of its beta product, and that is to eradicate fakenews and blatantly misleading new stories that permeate

the major media outlets.

Type of Security OfferedType of Security Offered Common Stock

Purchase Price of SecurityPurchase Price of SecurityOfferedOffered

$4.00

Minimum InvestmentMinimum InvestmentAmount (per investor) Amount (per investor)

$100

THE OFFERINGTHE OFFERING

Maximum 267,500* Shares of Common Stock ($1,070,000)

*Maximum subject to adjustment for bonus shares. See 10% Bonus below

Minimum 2,500 Shares of Common Stock ($10,000)

PerksPerks*

1. Any investors of $300 or greater are eligible to be the very rst alpha testers of theProof platform in December 2018. The alpha testers will receive a bonus which can beused to generate real money when the beta product launches.

2. Any investors of greater than $1,000 will be entitled to receive a $50 openingbalance with the launch of the beta product to be released in Q1-Q2 2019.

3. Any investors of $75,000 or greater will be invited to the Proof Kick-off Event in Q32019 with the management team.

*All perks occur after the offering is completed.

The 10% Bonus for StartEngine ShareholdersThe 10% Bonus for StartEngine Shareholders

Proof Media will offer 10% additional bonus shares for all investments that arecommitted by StartEngine Crowdfunding Inc. shareholders (with ≥ $1,000 invested inthe StartEngine Reg A+ campaign) within 24 hours of this offering going live.

StartEngine shareholders who have invested $1,000+ in the StartEngine Reg A+campaign will receive a 10% bonus on this offering within a 24-hour window of theircampaign launch date. This means you will receive a bonus for any shares youpurchase. For example, if you buy 100 shares of common stock at $4/ share, you willreceive 10 common stock bonus share, meaning you'll own 110 shares for $400. Fractional shares will not be distributed and share bonuses will be determined byrounding down to the nearest whole share.

This 10% Bonus is only valid for one year from the time StartEngine CrowdfundingInc. investors receive their countersigned StartEngine Crowdfunding Inc. subscriptionagreement.

Multiple ClosingsMultiple Closings

If we reach the target offering amount prior to the offering deadline, we may conductthe first of multiple closings of the offering early, if we provide notice about the newoffering deadline at least five business days prior (absent a material change thatwould require an extension of the offering and reconfirmation of the investmentcommitment).

THE COMPANY AND ITS BUSINESSTHE COMPANY AND ITS BUSINESS

The company's businessThe company's business

Description of BusinessDescription of Business

Proof Media, Inc. is a community enabled technology company that allows users tovote on the truthfulness of online content, such as news stories, blog posts, tweets andother social media. What makes the Proof solution successful is that it relies on thewisdom of crowds, coupled with a unique and proprietary voting algorithm, allrecorded on the r-chain blockchain. Proof has one main goal with the release of itsbeta product, and that is to eradicate fake news and blatantly misleading new storiesthat permeate the major media outlets. The product works in the following way:

1. a reader submits an article's URL to Proof;

2. registered Proof voters are then made aware of this article;

3. the voters read the article, perform research as to the truthfulness of the content,and then vote;

4. voters vote "mostly true" or "mostly false", and accompanying their vote is amonetary stake that they invested with their own money;

5. during the voting process, all votes are submitted in a blind manner, and no oneknows how many votes are placed, and in what direction;

6. after meeting various algorithmic thresholds, the vote will close and the winners areidentified as those who fall within the majority of the population;

7. losing voters will have a reduction in their wallet, and the reduction in the loserswallet will be transferred to the winner's wallet, less a fee to Proof.

Proof's voters are incentivized to get as many votes correct as possible. For each votethat a voter gets correct, they will be paid based on the number of Proofs invested withthe vote. When a voter gets the vote incorrect, they will lose Proofs, and therefore beincentivized to do a more rigorous job next time. For more information about ourvoters, please see: https://medium.com/@christopheryoung_22652/proofs-community-will-lead-the-frontier-in-the-battle-against-untruthful-content-cb7326e850a9

In addition to our voters, Proof has submitters and readers. Submitters are thosereaders who have identified an article or piece of online content that looks suspiciousor unsupported. These readers can submit the article's URL to Proof, and receive anotification when the voting is completed.

Lastly, our Readers are those who come to Proof for its growing meta database, wherejournals, journalists, and other relevant ranking data is provided.

Development Stage: Proof is currently in development with its alpha version comingto the market in Q4 2018.

Revenue ModelRevenue Model

Proof receives revenue by charging a small fee on the number of Proofs that changehands between the winners and losers of votes. Proof charges a 3% percent fee. Inaddition, Proof anticipates advertising on the platform at some future period. Additional revenue will be identified with new product uses.

Sales, Supply Chain, & Customer BaseSales, Supply Chain, & Customer Base

Proof is a multi-sided marketplace provider, meaning that it serves multiple clients,which include: voters, readers, submitters, and advertisers.

CompetitionCompetition

At this moment in time, there is no competitor offering the same solution as Proof. However, there are companies attempting to solve the fake news problem in adifferent manner. Following are other companies offering a different solution inhopes of solving the same problem:

1. TruStory

2. NewsGuard

https://medium.com/@christopheryoung_22652/proofs-community-will-lead-the-frontier-in-the-battle-against-untruthful-content-cb7326e850a9

3. Factmata

4. Snopes

5. PolitiFact

6. Factcheck.org

7. Trust Project

8. Eventum

9. WikiTribune

10. Claimbuster

11. Sapien

Liabilities and LitigationLiabilities and Litigation

Proof is not involved with any litigation, and presently has no outstanding liabilities,other than inter-period payroll. Proof expects to obtain a small corporate office, postthe capital raise. This office will most likely entail signing a 12-month lease.

The teamThe team

Officers and directorsOfficers and directors

Luigi D'Onorio DeMeo Co Founder, CEO and DirectorChristopher Young PhD Co FounderKevin Valentine Investor & Board of Directors

Luigi D'Onorio DeMeo For the past eight (8) years, I held various positions including my role as a Trader atCitigroup, specializing in equity securities and credit derivatives. My passion forfinancial markets led to a deep interest and appreciation into blockchain technology. Iview this technology as having the ability to fix what is broke with the internet andbuilding Proof is part of that mission. As a Co-founder of Proof, my role is to help setthe vision and path for the product and to work with the team to build the bestcommunity possible. My promise is to never compromise on quality and to alwaysremember why we are building Proof. I currently work at Proof Media full-time frominception in April 2018 to present and this is my primary role. Previous Roles:Associate at Sobel & Co LLC. Built financial models for purposes of economic damagesand M&A 3/2017 - 5/2018 Equity Trader at Citigroup ICG. Traded industrial, material& REIT sector on the US Institutional desk. 8/2015 - 2/2017 Credit Index Trader atCitigroup. Traded CDX HY and IG on Institutional Trading Desk. 6/2014 - 8/2015

Christopher Young PhD As co-founder of a startup, my role is, well, undefined. My daily task is to help buildour Proof community, to understand what excites them about the platform, or whatcan be enhanced. Some people may call this role, strategic marketing, others may callit strategy. At the core of my responsibility is to understand our users and to workwith our product management team to build the best community experience possible.Additionally, part of my role, wearing my economics hat, is to work with oureconomic advisory team to ensure we have the best voting mechanism possible and toalways be in front of the changing science in this area. Prior to Proof I wore manyhats, and some I still do so. I am a professor of business ethics at Rutgers BusinessSchool where I enjoy working with young minds as they think about their careers andthe choices they make in business. I currently work at Proof Media full-time frominception in April 2018 to present. Previous Roles: Professor at Rutgers BusinessSchool. Professor in Department of Management and Global Business. 7/2014 -Present (full-time and primary role) Co-Founder at Red Maple Economics. Testifyingexpert and economic damages consultant. 4/2018 - Present Co-Founder at ProofMedia 5/2018 - Present Fellow at Rutgers Institute for Ethical Leadership 12/2017 -Present Principal at Sobel & Co LLC. Managing Director of a team focused oneconomic consulting. 9/2012 - 4/2018 Managing Member at Reinvention Partners08/2007 - 12/2017

Kevin Valentine Kevin is an astute and trusted advisor experienced across a range of roles includingventure capital, business development, and financial analysis. Kevin started his careeras an analyst at Moody's Investor Service (10/2006 - 11/2007) where he focused onfinancial analysis and risk management. He then partnered (Partner) with a team oftech executives and scientists to form Q-Bank Group (11/2011 - present), a fund withan investment mandate focused on the commercialization of intellectual property(Artificial Intelligence and Neuroscience). Kevin became an investor in blockchainrelated projects in 2013 and serendipitously learned about RChain on Twitter fromRChain board member Vlad Zamfir. Today, Kevin is a member of RChain’s ExecutiveCommittee. Kevin has been a Venture Partner at Reflective Venture Partners sinceJanuary 2018 and retains a financial interest in Q-Bank Group. Previous Roles: BoardDirector at Proof Media 8/2018 - Present Venture Partner at Reflective Ventures4/2017- Present Business Development at Q-Bank 11/2011 - Present Co-op Member,Executive Committee at RChain Cooperative 4/2017 - Present

Number of Employees: 8

Related party transactionsRelated party transactions

Reflective Ventures invested $1,000,000 and received 20% of Proof Media Inc.common stock in the 2nd quarter of 2018. As of August 31, 2018, the cryptocurrencyheld is issued by Reflective.

RISK FACTORSRISK FACTORS

These are the principal risks that related to the company and its business:

The Proof Network The Proof Network Developing a voting network is of the utmost importance tothe success of the Company. If the Company is unable to establish this network,the chances of the Company not achieving its goals is high.Competitors Competitors We will compete with larger, established companies who currentlyhave products on the markets and/or various respective product developmentprograms. They have much better financial means and marketing/sales andhuman resources than us. They may succeed in developing and marketingcompeting equivalent products earlier than us, or superior products than thosedeveloped by us. There can be no assurance that competitors will not render ourtechnology or products obsolete or that the Proof platform developed by us willbe preferred to any existing or newly developed technologies. It should furtherbe assumed that that competition will intensify.No History. No History. Proof has no history, no clients, no revenues. If you are investing inProof, it's because you think the Proof platform is a good idea, that the Companywill be able to secure a large enough voter network to be successful, and that theCompany can execute on developing and marketing its products.Funds Required. Funds Required. We believe that we will need approximately $2 million USD tosuccessfully develop a voter network, and another $1m USD to continue todevelop the Proof platform. Should we not obtain this goal, Proof will continueto raise additional funds.Any valuation at this stage is difficult to assess Any valuation at this stage is difficult to assess The valuation for the offeringwas established by the company. Unlike listed companies that are valuedpublicly through market-driven stock prices, the valuation of private companies,especially startups, is difficult to assess and you may risk overpaying for yourinvestment.Business Projections. Business Projections. There can be no assurance that Proof will meet itsfinancial projections. There can be no assurance that the Company (and you willonly make money) if there is sufficient demand for the product, people think itsa better option than the competition and Proof has priced the services at a levelthat allows the Company to make a profit and still attract business.Uncertain Risk Uncertain Risk An investment in the Company (also referred to as “we”, “us”,“our”, or “Company”) involves a high degree of risk and should only beconsidered by those who can afford the loss of their entire investment.Furthermore, the purchase of any of the Common Stock should only beundertaken by persons whose financial resources are sufficient to enable themto indefinitely retain an illiquid investment. Each investor in the Companyshould consider all of the information provided to such potential investorregarding the Company as well as the following risk factors, in addition to theother information listed in the Company’s Form C. The following risk factors arenot intended, and shall not be deemed to be, a complete description of thecommercial and other risks inherent in the investment in the Company.Your investment could be illiquid for a long time. Your investment could be illiquid for a long time. You should be prepared tohold this investment for several years or longer. For the 12 months followingyour investment there will be restrictions on how you can resell the securities

you receive. More importantly, there is no established market for these securitiesand there may never be one. As a result, if you decide to sell these securities inthe future, you may not be able to find a buyer. The Company may be acquiredby an existing player in our industry. However, that may never happen or it mayhappen at a price that results in you losing money on this investment.We may not have enough capital as needed and may be required to raise moreWe may not have enough capital as needed and may be required to raise morecapital. capital. We anticipate needing access to credit in order to support our workingcapital requirements as we grow. Although interest rates are low, it is still adifficult environment for obtaining credit on favorable terms. If we cannotobtain credit when we need it, we could be forced to raise additional equitycapital, modify our growth plans, or take some other action. Issuing more equitymay require bringing on additional investors. Securing these additional investorscould require pricing our equity below its current price. If so, your investmentcould lose value as a result of this additional dilution. In addition, even if theequity is not priced lower, your ownership percentage would be decreased withthe addition of more investors. If we are unable to find additional investorswilling to provide capital, then it is possible that we will choose to cease oursales activity. In that case, the only asset remaining to generate a return on yourinvestment could be our intellectual property. Even if we are not forced to ceaseour sales activity, the unavailability of credit could result in the Companyperforming below expectations, which could adversely impact the value of yourinvestment.The loss of one or more of our key personnel, or our failure to attract and retainThe loss of one or more of our key personnel, or our failure to attract and retainother highly qualified personnel in the future, could harm our business other highly qualified personnel in the future, could harm our business To besuccessful, the Company requires capable people to run its day to dayoperations. As the Company grows, it will need to attract and hire additionalemployees in sales, marketing, design, development, operations, finance, legal,human resources and other areas. Depending on the economic environment andthe Company’s performance, we may not be able to locate or attract qualifiedindividuals for such positions when we need them. We may also make hiringmistakes, which can be costly in terms of resources spent in recruiting, hiringand investing in the incorrect individual and in the time delay in locating theright employee fit. If we are unable to attract, hire and retain the right talent ormake too many hiring mistakes, it is likely our business will suffer from nothaving the right employees in the right positions at the right time. This wouldlikely adversely impact the value of your investment.This offering involves “rolling closings,” which may mean that earlier investorsThis offering involves “rolling closings,” which may mean that earlier investorsmay not have the benefit of information that later investors have. may not have the benefit of information that later investors have. Once we meetour target amount for this offering, we may request that StartEngine instruct theescrow agent to disburse offering funds to us. At that point, investors whosesubscription agreements have been accepted will become our [shareholders]. Allearly-stage companies are subject to a number of risks and uncertainties, and itis not uncommon for material changes to be made to the offering terms, or tocompanies’ businesses, plans or prospects, sometimes on short notice. Whensuch changes happen during the course of an offering, we must file an amendedto our Form C with the SEC, and investors whose subscriptions have not yet been

accepted will have the right to withdraw their subscriptions and get their moneyback. Investors whose subscriptions have already been accepted, however, willalready be our [shareholders] and will have no such right.

OWNERSHIP AND CAPITAL STRUCTURE; RIGHTS OF THE SECURITIESOWNERSHIP AND CAPITAL STRUCTURE; RIGHTS OF THE SECURITIES

OwnershipOwnership

Reflective Ventures LLC, 20.0% ownership, Common StockSteve Careaga (General Partner of Reflective Ventures LLC), 33.0% ownership,Membership Interests of Reflective Ventures LLCGreg Heuss (General Partner of Reflective Ventures LLC), 33.0% ownership,Membership Interests of Reflective Ventures LLCDavid Otto (General Partner of Reflective Ventures LLC), 33.0% ownership,Membership Interests of Reflective Ventures LLCKevin Valentine (Venture Partner of Reflective Ventures LLC), 0.0% ownership,Membership Interests of Reflective Ventures LLCLuigi D'Onorio DeMeo, 40.0% ownership, Common StockChristopher Young, 40.0% ownership, Common Stock

Classes of securitiesClasses of securities

Common Stock: 5,000,000

The Company is authorized to issue up to 10,000,000 shares of common stock.There are a total of 5,000,000 shares currently outstanding.

Voting Rights Voting Rights

Holders of our common stock are entitled to vote on all matters submitted to avote of the stockholders, including the election of directors.

Dividend Rights Dividend Rights

Holders of our common stock are entitled to receive dividends if any, as may bedeclared from time to time by the board of directors out of legally availablefunds. We have never declared or paid cash dividends on any of our capital stockand currently do not anticipate paying any cash dividends after this offering orin the foreseeable future.

Right to Receive Liquidation Distributions Right to Receive Liquidation Distributions

In the event of the liquidation, dissolution, or winding up of the Company, or theoccurrence of a liquidation transaction, holders of the common stock will beentitled to share ratably in the net assets legally available for distribution tostockholders after the payment of all the Company’s debts and other liabilitiesand the satisfaction of any liquidation preference paid to Reflective Ventures.

Board PositionsBoard Positions

Presently, there are three board members. Reflective Ventures, the seedinvestor maintains one board position, Christopher Young and Luigi D'OnorioDemeo each maintain a board position, respectively.

What it means to be a Minority HolderWhat it means to be a Minority Holder

As a minority holder of common stock, you will have limited ability to influence ourpolicies or any other corporate matter, including the election of directors, changes tothe Company's governance documents, additional issuances of securities, companyrepurchases of securities, a sale of the Company or of assets of the Company, ortransactions with related parties.

DilutionDilution

Investors should understand the potential for dilution. Each Investor's stake in theCompany, could be diluted due to the Company issuing additional shares. In otherwords, when the Company issues more shares, the percentage of the Company thatyou own will decrease, even though the value of the Company may increase. You willown a smaller piece of a larger company. This increases in the number of sharesoutstanding could result from a stock offering (such as an initial public offering,another crowdfunding round, a venture capital round or angel investment), employeesexercising stock options, or by conversion of certain instruments (e.g., convertiblenotes, preferred shares or warrants) into stock.

If we decide to issue more shares, an Investor could experience value dilution, witheach share being worth less than before, and control dilution, with the totalpercentage an investor owns being less than before. There may also be earningsdilution, with a reduction in the amount earned per share.

The type of dilution that hurts early-stage investors mostly occurs when the companysells more shares in a "down round," meaning at a lower valuation than in earlierofferings.

If you are making an investment expecting to own a certain percentage of theCompany or expecting each share to hold a certain amount of value, it is important torealize how the value of those shares can decrease by actions taken by the Company.Dilution can make drastic changes to the value of each share, ownership percentage,voting control, and earnings per share.

Transferability of securitiesTransferability of securities

For a year, the securities can only be resold:

In an IPO;To the company;To an accredited investor; andTo a member of the family of the purchaser or the equivalent, to a trustcontrolled by the purchaser, to a trust created for the benefit of a member of thefamily of the purchaser or the equivalent, or in connection with the death or

divorce of the purchaser or other similar circumstance.

FINANCIAL STATEMENTS AND FINANCIAL CONDITION; MATERIALFINANCIAL STATEMENTS AND FINANCIAL CONDITION; MATERIALINDEBTEDNESSINDEBTEDNESS

Financial StatementsFinancial Statements

Our financial statements can be found attached to this document. The financialreview covers the period ending in 2018-08-31.

Financial ConditionFinancial Condition

Results of OperationResults of Operation

The Company has no historical operating history and is operating pre-revenue.Without any additional funds raised, the Company will no longer be able to fundoperations after March 2019. If the Company raises the full Regulation CF amount of$1,070,000, there will be enough runway through all of 2019 without including anyrevenue. The largest expenses to the Company in the near future are to funddevelopment and marketing which account for more than 60% of monthly expenses.

Financial MilestonesFinancial Milestones

The Company is operating as pre-revenue and is currently building technology withthe capital it has so far raised. The Company anticipates having enough resources andliquidity to deliver its Alpha product in Q4 2018. The Company is attempting to nowsecure funding via this capital raise and others to ensure delivery of its beta and finalproduct release.

The Company previously raised a total of $1,000,000 to be paid out as the Companyachieves certain milestones. At present, the Company has received 70% of the fundingand is due to receive the full amount by February 2019. The company is due to receive$100,000 in October, December and February. At present, the Company has no reasonto believe that there is any risk to meeting those milestones.

The Company anticipates generating revenue after its beta launch in Q1-Q2 2019. Thebeta product will include actual monetary stakes from Voters and thus, the Companywill generate revenue via fees on voting. We do not expect the Company to be initiallyprofitable from this revenue in Q1-Q2 2019. The Company is seeking to raise$4,000,000 to $7,000,000 in this capital raise including the $1,070,000 via this StartEngine raise.

The Company anticipates revenue of $760,000 and Total expenses of $1,500,000 in2019 and revenue of $6,000,000 and expenses of $3,400,000 in 2020. These projectionsare based on the Company's best efforts to forecast into the future.

LLiiqquuiiddiittyy aanndd CCaappiittaall RReessoouurrcceess

The company is currently generating operating losses and requires the continued infusion of new capital to continue business operations. If the company is successful in this offering, we will likely seek to continue to raise capital under crowdfunding offerings, equity or debt issuances, or any other method available to the company including lines of credit or potential angel investors. We believe that we will need approximately $2 million USD to successfully develop a voter network, and another$1m USD to continue to develop the Proof platform. Should we not obtain this goal, Proof will continue to raise additional funds.

As of October 31, 2018, Proof is due $210,000 in cash and $90,000 in RHOC from Reflective Ventures. These funds will be dispersed equally in November, January 2019 and March 2019. To receive these funds, Proof must deliver a Go to Market Strategy, deliver a full technical spec, and deliver a minimally viable product running on Rchain's testnet. Proof has already delivered the first two of the three deliverables and is expected to deliver the last deliverable in December.

The Company previously raised a total of $1,000,000 to be paid out as the Company achieves certain milestones. At present, the Company has received 70% of the funding and is due to receive the full amount by February 2019. The company is due to receive$100,000 in October, December, and February. At present, the Company has no reason to believe that there is any risk to meeting those milestones.

The Company has no historical operating history and is operating pre-revenue. Without any additional funds raised, The Company will no longer be able to fund operations after March 2019. If the Company raises the full Regulation CF amount of$1,070,000, there will be enough runway through December 2019 without including any revenue. If the Company raises the minimum amount of $10,000, the Company will need additional funds before April 2019. The largest expenses to the Company in the near future are to fund development and marketing which account for more than 60% of monthly expenses.

The Company intends to accept an investment of $45,000 from an investor who is affiliated with the issuer, Luigi Donorio Demeo, the CEO of Proof Media Inc.

IInnddeebbtteeddnneessss

The company does not owe any debt.

RReecceenntt ooffffeerriinnggss ooff sseeccuurriittiieess

2018-04-30, Section 4 (a)(2), 1000000 Common Stock. Use of proceeds:Marketing $17,799 Business Development 88,121 Salaries 127,640 Legal 5,672Travel 5,853 Rent 8,398 Payroll Taxes 12,576 Other 6,966 Total $273,025

ValuationValuation

$20,000,000.00

The aforementioned $20,000,000 valuation of the company is based on a GordonGrowth Model using the Company's 5-year cash-flow forecast. The valuation wascreated by the Company and assumes the Company will generate $300 million inRevenue in 2023 and $88 million in after-tax modified cash flow. The forecast assumesa 35% discount rate and long-term growth rate of 3% to establish the terminal value.The present value of the future cash flows plus the terminal value equals a producedvaluation of $20,080,000. This valuation is predicated on the Company raising$10,000,000 in additional capital (including this raise) over the next 5 years.

USE OF PROCEEDSUSE OF PROCEEDS

Offering AmountOffering Amount

SoldSoldOffering AmountOffering Amount

SoldSold

Total Proceeds:Total Proceeds: $10,000 $1,070,000

Less: Offering Expenses

StartEngine Fees (6% totalfee)

$600 $64,200

Net ProceedsNet Proceeds $9,400 $1,005,800

Use of Net Proceeds:Use of Net Proceeds:R&D & Production

$3,738 $400,000

Marketing $1,869 $200,000

Working Capital $467 $50,000

Salaries $2,803 $300,000

Other $523 $55,800

Total Use of Net ProceedsTotal Use of Net Proceeds $9,400 $1,005,800

We are seeking to raise a minimum of $10,000 (target amount) and up to $1,070,000(overallotment amount) in this offering through Regulation Crowdfunding. If wemanage to raise our overallotment amount of $1,070,000, we believe the amount willlast us 9 months and plan to use the net proceeds of approximately $1,005,800 as per

the above table.

The use of Marketing funds will be used predominately to acquire Voters on the Proofplatform. The Company has conducted a Market Research study which has helpedidentify the most likely Proof Voters and will use social media and advertising totarget those potential users.

The budgeting for R&D Production is primarily for continued effort to reach the betaproduct in Q1-21 2019. The funds will also be used to implement new features andgamification of the platform. After the release of the beta, the team will be focused onbuilding a mobile application.

The salaries budget include funding general operations and officers specifically CTO,Project Manager, Strategic Advisor, Lead Economist, Marketing Director andPresident.

Irregular Use of ProceedsIrregular Use of Proceeds

The Company will not incur any irregular use of proceeds.

REGULATORY INFORMATIONREGULATORY INFORMATION

DisqualificationDisqualification

No disqualifying event has been recorded in respect to the company or its officers ordirectors.

Compliance failureCompliance failure

The company has not previously failed to comply with Regulation CF.

Annual ReportAnnual Report

The company will make annual reports available at www.proofmedia.io/investors inthe section labeled annual report. The annual reports will be available within 120 daysof the end of the issuer's most recent fiscal year.

EXHIBIT B TO FORM CEXHIBIT B TO FORM C

FINANCIAL STATEMENTS AND INDEPENDENT ACCOUNTANT'S REVIEW FOR ProofFINANCIAL STATEMENTS AND INDEPENDENT ACCOUNTANT'S REVIEW FOR ProofMedia Inc.Media Inc.

[See attached]

PROOF MEDIA INC.

FINANCIAL STATEMENTS AUGUST 31, 2018

PROOF MEDIA INC. AUGUST 31, 2018

– 2 –

TABLE OF CONTENTS

Page Independent accountants’ review report………………………………….... 3 Financial statements:

Balance sheet……………………………………………………………... 4 Statement of operations…………………………………………………… 5 Statement of shareholders’ equity………...………………………………. 6 Statement of cash flows…………………………………………………... 7 Notes to financial statements……………………………………………... 8-11

INDEPENDENT ACCOUNTANTS’ REVIEW REPORT

To the Management Proof Media Inc. Manalapan, NJ

We have reviewed the accompanying financial statements of Proof Media Inc. (a corporation), which comprise the balance sheet as of August 31, 2018, and the related statements of operations, shareholders’ equity and cash flows for the period April 9, 2018 to August 31, 2018, and the related notes to the financial statements. A review includes primarily applying analytical procedures to management’s financial data and making inquiries of company management. A review is substantially less in scope than an audit, the objective of which is the expression of an opinion regarding the financial statements as a whole. Accordingly, we do not express such an opinion.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement whether due to fraud or error.

Accountants’ Responsibility

Our responsibility is to conduct the review engagement in accordance with Statements on Standards for Accounting and Review Services promulgated by the Accounting and Review Services Committee of the AICPA. Those standards require us to perform procedures to obtain limited assurance as a basis for reporting whether we are aware of any material modifications that should be made to the financial statements for them to be in accordance with accounting principles generally accepted in the United States of America. We believe that the results of our procedures provide a reasonable basis for our conclusion.

Accountants’ Conclusion

Based on our review, we are not aware of any material modifications that should be made to the accompanying financial statements in order for them to be in accordance with accounting principles generally accepted in the United States of America.

North Massapequa, NY

October 18, 2018

977 North Broadway.North Massapequa, NY 11758.Ph: (516) 541-0022.Fax (516) 541-7760

Current assetsCash $ 358,568

Related party cryptocurrency 53,741

Fixed assets, net of accumulateddepreciation of $149 2,834

Deferred tax asset 76,803Security deposit 3,584

Total assets $ 495,530

Current liabilitiesAccrued expenses $ 620

Shareholders' equityCommon stock, $0.01 par value, 10,000,000 share authorized,

5,000,000 shares issued and outstanding 50,000Additional paid-in capital 647,891Retained earnings (deficit) (202,981)

Total shareholders' equity 494,910

Total liabilities and shareholders' equity $ 495,530

ASSETS

PROOF MEDIA INC.BALANCE SHEET

AS OF AUGUST 31, 2018

LIABILITIES AND SHAREHOLDERS' EQUITY

See accompanying notes to financial statements.- 4 -

RevenueUser revenue $ -

Operating expensesAdvertising and marketing 17,799Bank fees 129Business development 88,121Computer expense 703Depreciation 149Insurance 4,896Job supplies 20Legal and professional services 5,672Travel, meals and entertainment 5,853Office supplies and software 749Payroll processing fees 320Rent 8,398Salaries and wages 127,640Payroll taxes 12,576Other expenses 6,259

Total expenses 279,284

Loss before tax benefit (279,284)

Income tax benefit 76,303

Net loss $ (202,981)

PROOF MEDIA INC.STATEMENT OF OPERATIONS

FOR THE PERIOD APRIL 9, 2018 TO AUGUST 31, 2018


Commonstock shares

Balance as of April 9, 2018 - $ - $ - $ - $ -

Shares issued 5,000,000 50,000 - - 50,000

Net loss - - - (202,981) (202,981)

Shareholders' capital contributions - - 647,891 - 647,891

Balance as of August 31, 2018 5,000,000 $ 50,000 $ 647,891 $ (202,981) $ 494,910

$0.01 per share

PROOF MEDIA INC.STATEMENT OF SHAREHOLDERS' EQUITY


Retained

equityearnings(deficit)

Additional paid-Incapital

Totalshareholders'

Common stockpar value


Cash flows from operating activitiesNet loss $ (202,981)Adjustments to reconcile net loss to net cash

(used in) operating activitiesDepreciation 149(Increase) decrease in operating assets:

Cryptocurrency (53,741)Security deposits (3,584)Deferred tax asset (76,803)

Increase (decrease) in operating liabilities:Accounts payable and accrued expenses 620

Net cash (used in) operating activities (336,340)

Cash flows from investing activitiesPurchase of property and equipment (2,983)

Net cash used in investing activities (2,983)

Cash flows from financing activitiesIssuance of common stock 50,000Shareholders' capital contributions 647,891

Net cash provided by financing activities 697,891

Net increase in cash 358,568

Cash, beginning of period -

Cash, end of period $ 358,568

PROOF MEDIA INC.STATEMENT OF CASH FLOWS



PROOF MEDIA INC. NOTES TO FINANCIAL STATEMENTS

AUGUST 31, 2018

– 8 –

NOTE 1 – NATURE OF BUSINESS Proof Media Inc. (the “Company”), a New Jersey corporation , was incorporated on April 9, 2018. The Company is developing an online platform (the “Online Platform”) where a community is incentivized to submit, research and vote on the truthfulness of content. NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of presentation The accompanying financial statements are prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America (“US GAAP”). Use of estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires the use of estimates and assumptions that affect the reported amounts of revenues, expenses, assets, liabilities and contingencies. Although actual results in subsequent periods will differ from these estimates, such estimates are developed based on the best information available to management and management’s best judgments at the time made. All significant assumptions and estimates underlying the reported amounts in the financial statements and accompanying notes are regularly reviewed and updated. Changes in estimates are reflected in the financial statements based upon ongoing actual experience trends, or subsequent settlements and realizations depending on the nature and predictability of the estimates and contingencies. Cash For purposes of the statement of cash flows, the Company considers cash in bank accounts, cash on hand and demand deposits as cash. Cryptocurrency RChain is a fundamentally new blockchain platform rooted in a formal model of noncurrent and decentralized computation. The RChain Cooperative (the “Co-op”) is leveraging that model through correct-by-construction software development to produce a concurrent, compositional, and massively scalable blockchain. Rchain was the culmination of a number of innovations that ultimately became Reflective Venture Partners LLC (“Reflective”). RHOCs are an Ethereum ERC20 token issued by the Co-op in early 2007 intended as a vehicle for people to get access to technology. Property and equipment Property and equipment are recorded at cost. Expenditures for major additions and betterments are capitalized. Maintenance and repairs are charged to operations as incurred. Depreciation of fixed assets is computed by the straight-line method over the assets’ estimated lives ranging from three to seven years. Leasehold improvements are depreciated over the lesser of the lease terms or the assets’ useful lives. Upon sale or retirement of fixed assets, the related cost and accumulated depreciation are removed from the accounts and any gain or loss is reflected in operations.


AUGUST 31, 2018

– 9 –

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Income taxes Under Accounting Standards Codification (“ASC”) 740, Income Taxes, (“ASC 740”) guidance is provided as to how uncertain tax positions should be recognized, measured, presented, and disclosed in the financial statements. US GAAP requires the evaluation of tax positions taken to determine whether the tax positions are “more-likely-than-not” to be sustained upon examination by the applicable taxing authority. Deferred tax assets and liabilities are recorded for the expected future tax consequences of temporary differences between the carrying amounts of assets and liabilities at the dates of the balance sheet and their respective tax bases. Deferred tax assets and liabilities are computed using currently enacted tax rates. Deferred tax assets are reduced by a valuation allowance, if necessary, to the amount that management believes will more likely than not be realized. Deferred tax assets and liabilities are adjusted for the effect of changes in tax laws and rates in the period in which changes are approved by the relevant authority. Deferred tax assets and liabilities are presented on a net basis for the same tax-paying component within the same tax jurisdiction. See Note 6 – Income Taxes. Strategic Partnership Agreement On April 30, 2018, the Company entered into a strategic partnership agreement (the “Agreement”) with Reflective in order to attempt to advance the business intentions including, the coordinated and synchronized release of products and/or services developed by the Company with the release of the Online Platform. The Agreement is for the period April 30, 2018 to October 31, 2018 and includes payments in cash and RHOC in exchange for equity in the Company totaling $850,000 and $150,000, respectively. If certain deliverables are not met or in the event of the early termination of the Agreement, the Company can repurchase the number of shares previously issued to Reflective pro rata pursuant to a restricted stock purchase agreement. See Note 7 – Related Party. Recent accounting pronouncements to be adopted The financial accounting standards board (“FASB) issued accounting standards update (“ASU”) 2015-17 Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes (“ASU 2015-17”). ASU 2015-17 require that deferred tax liabilities and assets be classified as noncurrent in a classified statement of financial position. The current requirement that that deferred tax liabilities and assets of a tax-paying component of an entity be offset and presented in a single amount is not affected by the amendments in this update. For non-public entities the amendments of ASU 2015-17 are effective for financial statements issued for annual periods beginning after December 31, 2017. The adoption of ASU 2015-17 will result in modified disclosures and management is currently evaluating the impact on the Company’s balance sheet and statement of operations.


AUGUST 31, 2018

– 10 –

NOTE 3 – PROPERTY AND EQUIPMENT As of August 31, 2018, fixed assets consists of the following:

Estimated Useful Life Computer equipment $ 2,983 5 years Less: accumulated depreciation (149) $ 2,834

Depreciation of $149 is reflected on the statement of operations for the period ended August 31, 2018. NOTE 4 – COMMITMENTS Office space lease The Company leases office space under the terms of a month-to-month lease (the “Lease Agreement”). As part of the Lease Agreement, a security deposit of $3,584 was remitted. Rent expense related to this lease was $8,398 for the period from April 9, 2018 to August 31, 2018. NOTE 5 – CONCENTRATION The Company maintains its cash in accounts that are insured up to $250,000 by the Federal Deposit Insurance Corporation (“FDIC”). Throughout the year, the bank balances may exceed the limit insured by the FDIC. At August 31, 2018, the total cleared balance for all accounts held by one of the financial institutions exceeded the insured amount by approximately $108,600. NOTE 6 – INCOME TAXES The components of the income tax benefit for the period April 9, 2018 to August 31, 2018 is as follows:

Current taxes: Federal $ - State 500 500 Deferred taxes: Federal (58,650) State (18,153) (76,803) Total benefit: $ 76,303


AUGUST 31, 2018

– 11 –

NOTE 6 – INCOME TAXES (CONTINUED) The components of the earnings loss before income taxes for the period April 9, 2018 to August 31, 2018 is as follows:

Domestic $ (279,284) $ (279,284)

A reconciliation of the tax benefit for the period April 9, 2018 to August 31, 2018, based on the federal statutory tax rate to the effective tax rate, is as follows:

Statutory tax benefit $ 76,303 Total $ 76,303

NOTE 7 – RELATED PARTY As of August 31, 2018, the cryptocurrency held is issued by Reflective. NOTE 8 – SUBSEQUENT EVENTS The Company has evaluated subsequent events through October 18, 2018, the date of which the financial statements were available to be issued. Office space lease Effective September 30, 2018, the Company cancelled their month-to-month Lease Agreement and expect to receive their full security deposit to be returned.

EXHIBIT C TO FORM CEXHIBIT C TO FORM C

PROFILE SCREENSHOTSPROFILE SCREENSHOTS

[See attached]

VIDEO TRANSCRIPT (Exhibit D)VIDEO TRANSCRIPT (Exhibit D)

Video #1 & #2Video #1 & #2

Between clickbait, bot farms and the widespread popularity of fake news...Between clickbait, bot farms and the widespread popularity of fake news...It’s getting harder than ever to separate fact from fiction.It’s getting harder than ever to separate fact from fiction.But what if there was a way to stop this downward spiral of deceit?But what if there was a way to stop this downward spiral of deceit?What if there was a way respected journalists had the opportunity to prove their upstandingWhat if there was a way respected journalists had the opportunity to prove their upstandingreputations?reputations?With the PROOF that dream is a reality.With the PROOF that dream is a reality.How does it work?How does it work?Meet Tim...Meet Tim...As Tim is scrolling through his news feed, he comes across a questionable article.As Tim is scrolling through his news feed, he comes across a questionable article.Tim isn’t sure about the accuracy of the story, so he sends it to PROOF.Tim isn’t sure about the accuracy of the story, so he sends it to PROOF.This is Kelly. She is a verified voter with PROOF.This is Kelly. She is a verified voter with PROOF.Kelly, along with the large communityKelly, along with the large community of PROOF voters looks at the article to objectively vote of PROOF voters looks at the article to objectively voteon the facts in the contenton the facts in the content..Proof brings everyone together on a quest for one thing...TRUTH...Proof brings everyone together on a quest for one thing...TRUTH...It has been proven, that large crowds are remarkably intelligent, under the right conditions andIt has been proven, that large crowds are remarkably intelligent, under the right conditions andare smarter than the smartest people in them.are smarter than the smartest people in them.Tim wins, Kelly Wins. Everyone Wins with PROOF.Tim wins, Kelly Wins. Everyone Wins with PROOF.Become a part of the Proof community today!Become a part of the Proof community today!

STARTENGINE SUBSCRIPTION PROCESS (Exhibit E)STARTENGINE SUBSCRIPTION PROCESS (Exhibit E)

Platform Compensation

As compensation for the services provided by StartEngine Capital, the issuer is required topay to StartEngine Capital a fee consisting of a 6-8% (six to eight percent) commissionbased on the dollar amount of securities sold in the Offering and paid upon disbursementof funds from escrow at the time of a closing. The commission is paid in cash and insecurities of the Issuer identical to those offered to the public in the Offering at the solediscretion of StartEngine Capital. Additionally, the issuer must reimburse certainexpenses related to the Offering. The securities issued to StartEngine Capital, if any, willbe of the same class and have the same terms, conditions and rights as the securities beingoffered and sold by the issuer on StartEngine Capital’s website.

Information Regarding Length of Time of Offering

Investment Cancellations: Investors will have up to 48 hours prior to the end of theoffering period to change their minds and cancel their investment commitments for anyreason. Once within 48 hours of ending, investors will not be able to cancel for any reason,even if they make a commitment during this period.Material Changes: Material changes to an offering include but are not limited to: Achange in minimum offering amount, change in security price, change in management,material change to financial information, etc. If an issuer makes a material change to theoffering terms or other information disclosed, including a change to the offering deadline,investors will be given five business days to reconfirm their investment commitment. Ifinvestors do not reconfirm, their investment will be cancelled and the funds will bereturned.

Hitting The Target Goal Early & Oversubscriptions

StartEngine Capital will notify investors by email when the target offering amount has hit25%, 50% and 100% of the funding goal. If the issuer hits its goal early, and the minimumoffering period of 21 days has been met, the issuer can create a new target deadline atleast 5 business days out. Investors will be notified of the new target deadline via emailand will then have the opportunity to cancel up to 48 hours before new deadline.Oversubscriptions: We require all issuers to accept oversubscriptions. This may not bepossible if: 1) it vaults an issuer into a different category for financial statementrequirements (and they do not have the requisite financial statements); or 2) they reach$1.07M in investments. In the event of an oversubscription, shares will be allocated at thediscretion of the issuer.If the sum of the investment commitments does not equal or exceed the target offeringamount at the offering deadline, no securities will be sold in the offering, investmentcommitments will be cancelled and committed funds will be returned.If a StartEngine issuer reaches its target offering amount prior to the deadline, it mayconduct an initial closing of the offering early if they provide notice of the new offeringdeadline at least five business days prior to the new offering deadline (absent a materialchange that would require an extension of the offering and reconfirmation of theinvestment commitment). StartEngine will notify investors when the issuer meets its

target offering amount. Thereafter, the issuer may conduct additional closings until theoffering deadline.

Minimum and Maximum Investment Amounts

In order to invest, to commit to an investment or to communicate on our platform, usersmust open an account on StartEngine Capital and provide certain personal and non-personal information including information related to income, net worth, and otherinvestments.Investor Limitations: Investors are limited in how much they can invest on allcrowdfunding offerings during any 12-month period. The limitation on how much theycan invest depends on their net worth (excluding the value of their primary residence) andannual income. If either their annual income or net worth is less than $107,000, thenduring any 12-month period, they can invest up to the greater of either $2,200 or 5% of thelesser of their annual income or net worth. If both their annual income and net worth areequal to or more than $107,000, then during any 12-month period, they can invest up to10% of annual income or net worth, whichever is less, but their investments cannot exceed$107,000.

the offering€¦ · any investors of $75,000 or greater will be invited to the proof kick-off...

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